Crude oil capped the largest gain of two weeks in 17 years amid speculation of the dropping rig count. Price volatility climbed to the highest level in about six years.
Brent crude rose 18% in the last 10 trading days, the highest level since March 1998.
The volatility index gauging fluctuations in the West Texas Intermediate crude climbed this week to the highest level since 2009.
The Wall Street Journal reported that March delivery US oil climbed 2.4% or $1.21 on Friday at $51.69 per barrel on the New York Mercantile exchange. The prices gained 7.2% for the week, the largest weekly percentage gain since February 2011.
The global benchmark, Brent climbed $2.2% or $1.23 to $57.80 a barrel on the ICE Futures Europe. The prices climbed 9.1% for the week.
The increasing decline in the rig count shows that the producers are pulling back on oil exploration as well as new drilling. The data of the past week showed a big drop in the horizontal rigs, which are usually used in shale-oil drilling.
Chief investment officer at Talara Capital Management, David Zusman said, “The shale industry in the US acts as an accordion that will expand and contract relatively quickly. The leading indicators, including drilling permits, rig count and overall capital spending, are already pointing to a brighter 2016.”
Bloomberg quoted Phil Flynn, senior market analyst at the Price Futures Group said, “There are signs that fundamentals are changing. We are seeing historical drops in the rig count and millions of dollars of spending cuts. Volatility is there because there is still a lot of uncertainty in the market.”
To contact the reporter of the story: Jonathan Millet at firstname.lastname@example.org